Mulberry will introduce lower price points after issuing another profit warning this morning - and said profits could be dampened in the medium term “while brand momentum rebuilds”.
Mulberry said there could be a longer “material adverse impact on profit” as the luxury business conducts a review into its strategy and market positioning.
The company also warned that it would miss expectations for the year ending March 31, with pre-tax profits taking a £2.7m hit, as a result of an impairment on two US stores. It is now expected to be around £14m, according to this morning’s a trading update. Turnover will be broadly in line with expectations.
The review has been launched under interim executive chairman Godfrey Davis, who stepped in when Bruno Guillon announced his departure in March.
“The primary objective is to reinvigorate sales by the introduction of more affordable new product,” the trading update said.
The business has also decided to slow international expansion to just five stores for the financial year just started, down from eight in 2013/14 “in order to control costs, whilst existing stores achieve greater traction”.
Davis added: “Following the recent change in management, we are focusing on achieving sales growth through the reinforcement of our product offering at more affordable prices to meet the expectations of our loyal customers. This will have short term financial consequences but is necessary to ensure the future strength of the Mulberry brand. The group remains profitable and cash generative, giving us the resources to invest for the future.”